L7-ch03.ppt - CHAPTER3 EVALUATINGAFIRMS FINANCIAL...

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CHAPTER 3  EVALUATING A FIRM’S  FINANCIAL  PERFORMANCE Financial Ratios 1. Liquidity Profitability 3. Leverage (Financing) 4. Return to owners (stockholders) The DuPont Model 1
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FINANCIAL RATIOS Tools that help us determine the financial health of a  company We can compare a company’s financial ratios with its  ratios in previous years.  (Trend analysis) We can compare a company’s financial ratios with  those of its industry. 2
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BALANCE SHEET   ($000)    Assets:    Cash $2,540 Accounts payable      9,721     Marketable securities  1,800 Notes payable        8,500    Accounts receivable 18,320 Accrued taxes payable       3,200    Inventories 27,530 Other current liabilities       4,102    Total current assets           50,190 Total current liabilities            25,523    Plant and equipment43,100 Long-term debt (bonds)             22,000     less  accum depre. 11,400 Total liabilities            47,523                31,700 Common stock ($10 par)      13,000          Total assets        81,890 Paid in capital      10,000 Retained earnings     11,367 Total stockholders' equity            3
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INCOME  STATEMENT   Sales (all credit) $112,760   Cost of Goods Sold   (85,300)  Gross Profit     27,460   Operating Expenses:      Selling             (6,540)      Total Operating Expenses
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L7-ch03.ppt - CHAPTER3 EVALUATINGAFIRMS FINANCIAL...

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